Month: May 2024

Jordi Sendra, chief executive officer at Alea, discusses 2023 successes and how this positive trajectory has primed the team to develop a world leading aggregator platform. When it comes to creating a platform there are three key principals – to be secure, scalable and robust – all of which has helped Alea push operators into emerging markets, such as Brazil, as well as expand in mature regions like Romania and Spain. Now, firmly into 2024, the team is ready to push forward with new products for the market.

A Moneyval follow-up report found that Bulgaria has improved its measures for tackling money laundering and combatting the financing of terrorism since a disparaging mutual evaluation report was published in 2022. Two years ago, the Moneyval committee placed Bulgaria on its compliance enhancing procedures. This has the Council of Europe work with individual countries to rectify AML failings.

Moneyval found that out of 40 applicable Financial Action Task Force (FATF) recommendations, Bulgaria is now fully or largely compliant in 13. The nation is at least partially compliant with the remaining 27 recommendations.

Among those areas now fully compliant are designated non-professional business and professions (DNFBPs) customer due diligence. This includes the gambling and casino sector, as well as real estate and legal services.

“Since the adoption of its mutual evaluation report in May 2022, Bulgaria has taken numerous steps to strengthen its anti-money laundering and combatting terrorist financing systems,” Moneyval said in a statement.

Moneyval is a permanent monitoring body of the Council of Europe entrusted with the task of assessing compliance with the principal international standards to counter money laundering and the financing of terrorism.

New AML monitoring unit in Bulgaria

Last year, a new National Revenue Agency (NRA) in Bulgaria ramped up its oversight of gambling with the creation of a new AML unit.

The AML unit will enforce requirements such as customer verification, collecting documents and creating money laundering and terrorist financing risk assessments. It will also monitor operations, transactions and customers flagged as suspicious and share information with authorities in other countries.

The unit sits within the NRA. This is the department which assumed control of gambling regulation in 2020 after Bulgaria disbanded the State Commission on Gambling.

The AML unit’s launch follows Bulgaria’s national money laundering risk assessment, which flagged deficiencies across a number of sectors.

Bulgarian market continues to grow

At the start of this year, the Bulgarian gambling industry was predicted to generate BGN200m (£88m/€102.3m/$111.7m) for the country’s budget in 2024.

With gambling adding over BGN300m in taxes and fees to the state budget over the last two years, changes to Bulgaria’s tax structure could help boost its financial contribution even further.

However, the fee for obtaining a licence has increased significantly – up 300% on previously. Tax on income has also jumped from 15% to 20%.

If the November election were held today, the Missouri sports betting initiative proposal backed by the state’s professional sports teams would fail. The poll showed it has the least amount of support of four potential initiative questions.

Overall, 60% of those polled say they are against legalisation, 36% are in favour and 4% are undecided. Remington Research Group, on behalf of Missouri Scout, surveyed 684 likely voters over two days between 8-9 May.

At issue is an initiative proposal that would allow for statewide digital wagering requiring platforms to be tethered to professional sports venues or existing casinos. The proposal is a departure from bills that have failed in the state legislature. And it likely does not have the full support of the state’s casinos.

Legalisation has been elusive

Missouri’s general assembly has been trying for more than five years to legalise sports betting. But the effort has been stymied by Senator Denny Hoskins, who has long wanted to tie wagering and video lottery terminal (VLT) legalisation together. His bills have stalled because the state’s casinos say the VLTs are a threat to their businesses. The machines closely resemble slot machines.

The casinos want the state to ban the machines, which are currently operating in a grey area. The machines can be found in convenience stores or restaurants and are neither explicitly allowed or prohibited in the state, which means they are unregulated.

As Hoskins has pushed his agenda, he has rallied against several bills that had the backing of the casinos and professional teams. Hoskins filibustered during two sessions to prevent house bills backed by both from getting a vote on the senate floor.

Who would DK, FD side with?

While the consortium of the state’s casinos planned to wait it out – Hoskins term-limits out later this year – the pro teams went rogue. Under the name “Winning for Missouri Education” the teams filed multiple initiative proposals and are now moving forward with one that would allow for digital platforms and brick-and-mortar sportsbooks. Earlier this month, the proponents submitted 340,000 signatures to the state for verification.

But casino companies would get only a single skin no matter how many locations they have. In the legislative proposals, casino companies were allotted up to three.

Caesars Entertainment and Penn Entertainment each operate three properties in Missouri. Affinity Gaming, Boyd Gaming and Century Casinos each operate two.

Two key wagering players – DraftKings and FanDuel – don’t have a clear side to align with. Neither company has a brick-and-mortar property in Missouri, but they do lobby and have relationships with the casino companies. As an example, FanDuel has an agreement under which it operates retail and digital sportsbooks for Boyd Gaming.

Missourians oppose abortion, too

In the end, the politics may not matter. In no category did would-be voters who were polled support the Missouri sports betting initiative proposal.

Of the three other potential ballot questions, Missouri’s voters oppose legalising abortion. However, on that question Democrats, and those who define themselves as moderates or progressives, overwhelmingly support the idea. According to the poll, 71% of Democrats support the idea and 73% of Republicans oppose it.

Missourians are in favour of increasing the minimum wage and requiring paid leave for workers to care for family members. They also support making it tougher to amend the state constitution.

Illinois lawmakers discussed the increase during a 2025 budget meeting over the weekend. While plans are yet to be approved, the potential rise has already hit leading operators including DraftKings and Flutter.

The current proposal on the table is for a graduated wagering tax structure to replace the existing 15% flat rate. This would set rates at between 20% and 40%, depending on each operator’s adjusted gaming revenue (AGR). 

Licensed operators with generated AGR of $30m (£23.5m/€27.6m) a year would pay tax at 20%. However, if an operator reports more than $200m, they would face a 40% rate – some 167% more than at present. This would be the second-highest tax rate in the US behind New York at 51%.

Other boundaries include a 25% rate for AGR between $30m and $50m, 30% for AGR ranging from $50m to $100m, and 35% for AGR between $100m and $200mm.

For major operators such as DraftKings and FanDuel, they would qualify for the top level of tax in Illinois. While the plans are yet to be approved, the mooted increase hit the operators during trading on Tuesday, with the markets having been closed on Monday for Memorial Day in the US.

Stock down at DraftKings and Flutter at close

Upon the market opening yesterday, the impact of the proposals was immediately clear to see at DraftKings and Flutter, both of which have a heavy presence in Illinois.

Starting with Flutter, having closed at $204.11 before the weekend, within half an hour of trading yesterday, its stock was down to $196.64, a drop of 3.7%. 

Flutter stock continued on a downwards trend through the day before closing at $188.33 in the US. This is 7.7% lower than the final price on Friday evening before the long weekend.

As for long-time rival DraftKings, the trading pattern for Tuesday reads similar. DraftKings ended last week with shares at $40.75, but this fell 12.0% to $35.88 within an hour of the market opening on Tuesday.

DraftKings did see some level of recovery throughout the rest of the day. However, its closing price of $36.61 is still 10.2% lower than on Friday afternoon. 

What are the analysts saying about Illinois?

Responding to market movement and the proposed tax rise, Truist analysts say it is unclear how operators will respond. However, the analysts did set just how the higher rate could hit current Illinois licensees.

Based on FY23 figures, both FanDuel and DraftKings fall into the 40% tax category. FanDuel, with an AGR of $480m, would have paid an additional $102m in tax, while DraftKings, with $312m in AGR, would be due an additional $78m.

As for other operators in the state, the tax hike would be less impactful but still noticeable. Rush Street Interactive would see a 30% rate, meaning a further $12m due in the $82m AGR posted in FY23. BetMGM ($43m AGR), Penn Entertainment ($38m AGR) and Caesars ($33m AGR) would all place in the 20% tax bracket.

While analysts say this could potentially open the door for smaller operators to gain round on DraftKings and FanDuel, it may lead to wider concerns – especially if other states follow suit and also raise tax.

Lawmakers in multiple states have considered wagering tax increases over the last year. But, so far, only Ohio lawmakers have taken action. Massachusetts lawmakers last week shot down proposals to increase the tax rate from 20% to 51%.

“The graduated tax scheme could present an opportunity for smaller players to gain some market share at the expense of the two large players while still maintaining lower relative tax rates,” Truist analysts said. 

“That said, part of DraftKings’ and FanDuel’s dominance relates to their tech offerings and not just promos/odds. Then there are the wider risks of course if more states increasing taxes, which may or may not be progressive.

Could tax rise fuel illegal gambling?

Another point that may cause concern, however, is it could lead to licensees reducing offers in Illinois, which in turn could lead to more players using illegal sites that offer such promotions but do not hold a licence and, as such, are not subject to tax laws. 

Analysts referenced a recent statement from the Sports Betting Alliance, a coalition of major operators including FanDuel, DraftKings and BetMGM, which hit out at the proposed hike and how it could force players to illegal operators.

“One aspect of the Alliance response we’d echo is that we think states are underestimating the prevalence of the illegal markets, which on-shore operators compete with fiercely,” Truist analysts said. 

“We conducted a recent survey of online sports betting players, which showed 31% of respondents bet offshore, though 71% of VIPs do. That stat is in-line with prior data we’ve featured from Juice Reel that shows off-shore books see 18% of the platform’s total tracked bets, though 46%/50% of online sports betting handle/revenues.”

The Sports Betting Alliance (SBA) called the budget an “extremely disappointing decision that will cause real harm”. The proposal nearly triples the tax rate for the most successful operators.

Sunday’s version of the budget, passed by the senate, is different from the house proposal. It would make Illinois the second-most expensive state for wagering operators to do business in.

At the highest end of the scale, the operators with the highest adjusted gross revenue would pay a 40% tax. Only New York’s 51% is higher for a state with a competitive market.

The vehicle for the tax is HB 4951, which did not include the progressive sports betting tax when the house approved it. The bill now goes back to the house for concurrence.

Even smallest operators will pay more

Late Saturday (25 May), the house adjourned until after the holiday weekend and, at that time, a proposed progressive sports betting tax was already circulating in Springfield.

Operators have been paying a 15% tax since sports betting went live in June 2021. Earlier this year, Governor JB Pritzker proposed an increase to 35%. The senate version of the budget goes beyond that, even on the low end.

Under the sliding scale, the cheapest tax would be 20% and the highest 40%. The senate’s progressive sports betting tax separates AGR for retail and digital sportsbooks. If an operator has retail and digital sportsbooks, it appears it would pay separate taxes for each, although the cutoffs are the same.

20% tax on AGR up to $30m

25% on AGR of revenue between $30m-$50m

30% on AGR of revenue between $50m-$100m

35% on AGR of revenue between $100m-$200m

40% on AGR of revenue over $200m

The new scenario represents at least a small savings versus the original scenario for some operators. In this framework DraftKings, for example, would have paid 20% tax on its retail AGR, which was $7m for FY2024. It would have paid 40% on its digital AGR, which was $350m.

Rush Street, as an example, would see a more significant savings under the senate scenario.

The company’s retail sportsbook had AGR of $12m for FY2024. Online AGR was $81m. Rather than pay 30% tax on all AGR, Rush Street would have paid a 20% tax on the $12m and 30% on the $81m.

SBA: Expect “‘”worse products”‘” if tax hike becomes law

The SBA, comprised of BetMGM, DraftKings, Fanatics Sportsbook, and FanDuel, said it rallied 55,000 Illinois citizens to email lawmakers to vote against the increase.

After the vote, the SBA response to the senate was swift and direct. Lobbyist Jeremy Kudon tweeted out a statement saying the proposed progressive sports betting tax “counterproductively penalises sports betting operators who invested millions into the local economy and created jobs in the state.

“This tax hike means worse products, worse promotions and, inevitably, worse odds for Illinois customers – not to mention provide a massive leg up to the dangerous, unregulated illegal offshore sportsbooks who pay no taxes and adhere to none of Illinois’ sports betting regulations.”

Kudon went on to say that should the proposal become law, sportsbooks would have “to reevaluate their level of investment and participation in the state”.

In March DraftKings opened its second brick-and-mortar location in Illinois at Wrigley Field. It also has a retail sportsbook at Casino Queen East St Louis. FanDuel has built out three in-person sportsbooks at the United Center, the former Fairmount Park and Par-a-Dice Casino.

Illinois would become the second state and first big US market with a progressive sports betting tax tax. In Arkansas, all casino revenue is taxed at 13% for the first $150m and 20% for revenue above $150m. Sports betting revenue is included in casino revenue.

Sweden gambling regulator Spelinspektionen first issued Kindred with a fine and penalty in March 2020. At the time, the penalty fee, referencing offering unauthorised bonuses and lotteries without a licence, was set at SEK100m.

Licensees in Sweden can only offer sign-up bonuses to customers, with all other offers being prohibited. However, checks on Kindred-owned Unibet, Maria Casino, Storspelare, Bingo and iGame websites in March 2019 uncovered various unauthorised bonuses. These included an online bingo loyalty scheme.

Kindred hit back, arguing these should not be considered bonuses and were instead an in-game mechanic. However, further checks in May and June 2019 uncovered more offers, such as free spins, free online bingo and free bets. 

In addition, Kindred was found to be offering rewards for playing poker including prize draws, which Spelinspektionen said Kindred was not licensed to offer as this was deemed a type of lottery game.

The findings led Spelinspektionen to issue the SEK100m penalty fee and official warning to the operator.

Second reduction for Kindred

In response, Kindred filed an appeal with the Administrative Court in Linköping. Incidentally, the court in July 2021 chose to reduce the fine, slashing it in half to SEK50m. 

Ruling on the case, the court agreed with Spelinspektionen there were multiple serious bonus failings but also said a “medium-high penalty fee” was more appropriate. Fines in Sweden are based on an operator’s turnover. This, combined with the seriousness of the offences, led to Spelinspektionen initially issuing a “high penalty fee” to Kindred.

Now, the same Administrative Court in Linköping has ruled that the fee should be reduced further. The new total facing Kindred is SEK30m.

Responding to the decision, Kindred reiterated its ongoing argument that it is of the opinion since the rules on bonuses were vague and open for interpretation, the sanction fee should be reduced in its total. It also noted that after initial contact from the regulator, it changed its offerings to meet the requirements. 

Spelinspektionen is yet to comment on the further reduced penalty fee.

Revenue in the three months to 31 March hit CA$5.9m (£3.4m/€4.0m/US$4.3m). This is 63.9% up from the $3.5m reported by NorthStar in Q1 of the previous year. 

Incidentally, Q1 of last year saw NorthStar Gaming complete the reverse takeover of Baden Resources. Baden, which owns Canadian property business Midway Property, combined with NorthStar Gaming Inc and a wholly owned subsidiary of Baden.

The takeover, coupled with other factors, helped push revenue up year-on-year in Q1 this year. Another is NorthStar extending to all provinces and territories in Canada in October 2023, having only previously been remained accessible in Ontario.

Other developments flagged by NorthStar include “notable” improvements across its key performance indicators. These include a 42.0% increase in active players, 9.0% drop in cost per acquisition of a customer (CPA), and 54.0% rise in estimated 12-month player values.

Add in the recently renewed strategic marketing agreement with Playtech Software, which will contribute services valued at up to $4.0m to October 2024, and CEO and chair Michael Moskowitz said this places NorthStar in a solid position for further growth.

“In Q1 we continued our pattern of strong year-over-year growth, highlighted by record total wagers,” Moskowitz said. “Our premium customer experience and growing brand awareness are propelling higher player retention, strengthened loyalty and increased player values. 

“These positive trends enable us to spend our marketing dollars more efficiently. This then contributes to improved operating leverage as the business scales.”

Record wagers drive revenue up in Q1

Taking a closer look at the Q1 figures, $5.8m of all revenue came from gaming activities, up 61.1%. Gaming revenue is drawn from both sports betting and casino.

The remaining $159,327 came from managed services within the Slapshot Media business that was acquired in 2023. As the deal did not complete until after Q1 last year, there are no year-on-year comparable figures.

NorthStar also said revenue benefitted from the expansion of its brand across all regions in Canada. Wagers reached a record high, with total spend on Northstarbets.ca climbing 55.5% to $218.0m.

Turning to spending, revenue costs increased 83.3% to $2.2m, with operator participant and service providers fees increasing. However, operating expenses were down 21.4% to $7.7m, with last year’s spend including $2.8m worth of listing associated with the TSX Venture Exchange public listing.

Financial costs hit $976,710, meaning pre-tax loss amounted to $6.5m, down from 25.3% in 2023. NorthStar did not pay tax either this year or last, meaning comprehensive net loss also stood at $6.5m.

“Our team is making regular improvements to our service offering, such as the recent launch of a VIP Elite strategy aimed at the most active players who drive a meaningful share of our results,” Moskowitz said.

“We have some exciting demand creation activities planned for the coming months along with further innovations to our platform and content. We remain focused on unlocking value for our stakeholders and are excited about the opportunities ahead of us in 2024.”

NorthStar welcomes Dhushenthen as permanent CFO

In other news, NorthStar has announced that interim CFO Dhushenthen will now take on the role full time.

Dhushenthen has served as interim CFO since November following the departure of Jennifer Barber. He was previously vice president of finance and compliance at the operator. 

Prior to NorthStar, Dhushenthen spent 13 years in financial leadership roles at CAPREIT, a Canadian provider of quality rental housing.

“Chin has demonstrated strong leadership of the finance team and excellent knowledge of our compliance and financial reporting systems,” Moskowitz said. “I look forward to his continued contributions.”

The latest budget proposal Saturday afternoon included a graduated wagering tax structure that would set rates between 20-40%, depending on an operator’s adjusted gaming revenue (AGR).

Those with AGR of $30m per year or less would be taxed at 20% while those with AGR of $200m or more would be taxed at 40%.

Here’s a look at the proposed breakdown:
20% tax on AGR up to $30m

25% on AGR on revenue over $30m-$50m

30% on AGR on revenue over $50m-$100m

35% on AGR on revenue over $100m-$200m

40% on AGR on revenue over $200m

Top operators would see taxes nearly triple

Companies like DraftKings and FanDuel, the biggest operators in Illinois, would easily fall in the 40% tax category, based on AGR from previous years.

Smaller operators, like Circa Sports, would likely fall into the 20% tax category. Most other operators in Illinois would fall somewhere in between.

At 40%, Illinois would be the second-most expensive competitive market to do business in.

New York has a 51% tax rate, and operators there are struggling to profit. The top tier of the tax on the proposed sliding scale is higher than the 35% rate Governor JB Pritkzer initially proposed. Major operators have been lobbying against Pritzker’s proposed increase for weeks.

“The notion that you would punish the operators who invest the most and create the most jobs in the state is totally backwards,” an industry source who wished to be unnamed told iGB. “Policymakers should be incentivizing operators to create jobs and invest resources on building the Illinois market. This does just the opposite.”

Pritzker’s proposal was for a flat tax rate that would more than double the current 15% tax rate. Sources said Saturday that the flat tax idea was back on the table. It seems likely there will be an increase, the question is how much.

Should Pritzker succeed in getting the increase, he would be the second governor in a legal sports betting state to do so. At the behest of Governor Mike DeWine, Ohio legislators last July doubled the wagering tax from 10% to 20%.

Other states weigh raising rates

Lawmakers in multiple states have considered wagering tax increases over the last year. But so far, only Ohio lawmakers have taken action.

Massachusetts lawmakers last week shot down a proposal to increase the tax rate there from 20% to 51%.

A bill in New Jersey would increase the tax on digital wagering from 13% to 30% and on online gambling from 15% to 30%. The bill is still in committee.

Eight digital platforms are live in Illinois, and in 2023 generated $1.03bn in adjusted gross revenue. The state took in $151.4m in taxes.

Budget deadline is next month

Illinois lawmakers were scheduled to adjourn at the end of Friday (24 May), but agreed to extend the session in an effort to approve a budget. The legislature technically has until June 30 to pass a budget, but generally adjourns well before that.

According to NPR, if the budget is approved after May 31, the number of votes needed for approval increases.

Capitol News Illinois reporter Hannah Meisel tweeted a statement from House Speaker Emanuel Welch late Saturday:

“The House and Senate are very close to an agreement on a final budget. Procedurally, the earliest an agreement could pass both chambers is next week. To let members and staff rest and spend time with family, we are adjourning for the holiday weekend and will return to complete this work.”

Lawmakers did tackle several key issues late Friday and Saturday, advancing bills about abortion, maternal rights, carbon storage, and health insurance reform.

So far, there’s no consensus, which means that the Illinois legislature will extend its session into the Memorial Day weekend.

Governor JB Pritzker earlier this year began pushing to increase the Illinois betting tax rate from 15% to 35%. Pritzker has argued that his state isn’t getting the kind of revenue that bigger states like New York (51% tax rate) and Pennsylvania (36% tax rate) are reaping.

A key difference, however, is that more-comparable Pennsylvania allows promotional deductions, making the effective tax rate 24%, according to Vixio. Illinois and New York do not allow for promo deductions. New York has the biggest competitive marketplace in the US, and operators were willing to weather the high tax rate in exchange for the exposure. According to one industry group, at least some legal operators are in the red in Illinois.

Pritzker’s proposal is part of a bigger trend. Last July, Ohio Governor Mike DeWine put a 10% wagering tax hike in his budget and it passed. Operators went from paying a 10% tax to a 20% tax. Ohio also allows for promotional deductions, which means that the stated tax rate is lower than the stated rate.

Massachusetts lawmaker reject 51% tax rate

Massachusetts lawmakers Thursday (23 May) rejected a proposal to increase the tax rate from 20% to 51%. The proposal in the Bay State came from Senator John Keenan, and would have been wrapped into the state budget. Keenan leaned into problem gambling and the idea that operators should pay to treat those who develop an addiction during debate.

But Massachusetts already has some of the most stringent responsible gaming regulations in the country, and has the most well-funded problem gambling program in the US. According to the National Association of Administrators for Disordered Gambling Services, in 2021, Massachusetts earmarked $10.2m for problem gambling as compared to $5.6m for New York, which is nearly three times as big.

New Jersey lawmakers are also considering a hike. A bill filed in April would more than double the wagering tax from 13% to 30%. It would also raise the online gambling tax from 15% to 30%. The bill is in the Senate State Government, Wagering, Tourism, and Historic Preservation Committee, but doesn’t have a hearing date.

Illinois betting tax rate increase would ‘change calculus’

There’s been pushback against an Illinois betting tax rate increase from the industry, and Thursday, the state’s unions added their voices. The Sports Betting Alliance (SBA), comprised of BetMGM, DraftKings, Fanatics Betting & Gaming, and FanDuel, is campaigning against the increase. A spokesperson said that 53,000 e-mails have been sent from constituents opposing the hike to state lawmakers.

“These companies entered in Illinois with the understanding they would be operating under a 15 percent tax rate,” SBA spokesman Nathan Click said via e-mail. “All the companies I represent are currently operating in the red in the state, but are still investing in Illinois based on long-term potential under a 15 percent tax rate.

“Doubling the tax rate massively changes the calculus – and basically makes these investments exceedingly harder to recoup- much less turn a profit. The state taxes promotions, so operators effective tax rate is actually between 30-60 percent.”

In a statement, the SBA pointed to legalising online gambling as an alternative way to drive tax revenue. Online gambling has broader reach and a bigger profit margin. The SBA projects Illinois could bring in $750m in annual revenue from online gambling. Lawmakers earlier this year declined to consider a bill legalising it.

The Illinois legislature had until 22 May to approve a budget and adjourn on time. As of Thursday night, a budget had not been approved and the expectation is that the session will run into, if not through, the holiday weekend. In 2019, sports betting was legalised in an extended legislative session.

In what was another financially positive year for Paf, revenue was 6.9% higher year-on-year. The operator also had a 23.0% rise in net profit to €55.1m, another new annual record.

However, while CEO Christer Fahlstedt welcomed the news and praised Paf’s performance, he also warned over future profit prospects. In particular, Fahlstedt picked up on how rising gaming taxes in various markets will likely hit net profit levels in years to come.

In Finland, a temporary reduction on lottery tax has ended, with rates now rising from 5% to 12%. Meanwhile, Swedish gambling tax is increasing from 18% to 22%, Estonia 5% to 6% and Latvia from 10% to 12%.

“We can be happy and proud with the past year,” Fahlstedt said. “We have gained a larger customer base, and the number of active customers has increased by 27%, which explains some of it. 

“However, we are also well aware that the temporarily low gaming taxes in Finland have helped the result. The trend of increasing gaming taxes will continue.”

Fahlstedt also references the impact of what he describes as “much needed” demands for increased responsible gaming measures. Incidentally, Paf this month took the decision to further reduce loss limits for players aged between 20 and 24 to €8,000. This follows Paf overhauling its mandatory online loss limit in April 2023 lowering it from €20,000 to €17,500.

“Changes will result in reduced profitability and many operators will find it more difficult,” Fahlstedt said. “But Paf is well prepared for the times ahead.”

Online growth drives revenue up at Paf

Analysing revenue performance in 2023, it is clear to see where growth is coming from at Paf. Revenue from its online business climbed 8.2% to €153.8m, with Paf noting strong growth across Sweden, Spain and Latvia.

The latter was helped by its acquisition of Latvia-facing William Hill Latvia SIA and SIA Mr Green in June 2023. These deals, Paf says, generated an additional €5.1m in online revenue.

Paf also reported a 27.3% increase in registered online customers to a record 615,557. On this, the operator expects this total to continue to grow in 2024 with support from ongoing marketing efforts.

As for Paf’s other business, revenue from the land-based and ship segment slipped 0.9% to €23.3m. This was despite a 4.0% increase in the overall number of ship passengers in 2023.

Here, Paf agreed new deals with Tallink Group and Eckerö Linjen and welcomed Finnline’s new ship, M/S Finnsirius. Paf also launched its first land-based GameRoom in collaboration with Pikseli in Helsinki. The GameRoom concept offers a mix of amusement games and entertainment

Paf also noted an increase in cashless payments, with all amusement games and nearly half money slot machines now offering cashless options. This, Paf says, meets customer demand for smoother payment options.

“Through these actions and innovations, we look forward to continued growth and improvement of our service and offerings,” Paf said.

Net profit rises on revenue growth

Turning to costs, materials and services expenses edged up 7.9% to €42.6m. Staff costs were level at €24.2m while depreciation and impairment was only marginally higher at €10.6m.

Other operating expenses were reduced by 2.0% to €52.9m while Paf was slightly boosted by €723,605 in net financial income. 

As such, it was left with a pre-tax profit of €60.0m, up by 27.9% year-on-year. After paying €5.2m in tax and accounting for the impact of €305,468 in deferred taxes, net profit for 2023 increased 23.0% to €55.1m.

Paf also noted that higher revenue and profit allowed it to distribute €31.4m in funds during 2023. These funds are used for the benefit of society including third sector organisations that work to promote society in social activities, culture, youth work, sports, environmental activities and more.

“It’s undeniably great that Paf is achieving a great result, allowing us to distribute a total of €31.4m,” chairman Jan-Mikael von Schantz said. “The employees have done a phenomenal job over the past year, and the board would like to thank all Paf employees who have made this possible.”